Are you familiar with the advantages of accounts receivable automation? Traditionally, a bank lockbox has been used by organization Accounts Receivable departments to increase efficiency.
Lockboxes have been around for a while now and a lot of the traditional bank lockbox's life has been used for capturing payment data associated with payments made by check. Commercial banks provided this service to improve effectiveness and flow of company transactions simplifying the accounts receivables collection process.
Customers generally use the bank lockbox to receive check payments in one consistent location.
Bank lockboxes are strategically placed in a central location to reduce mail delivery time, which also helps with lowering the business’ Days Sales Outstanding (DSO). Banks receive the paper check, process it along with the remittance data and send the information back to their customer. Because banks are processing checks and remittance this decreases the clients A/R workforce and increases their efficiency. The price of the bank lockbox is typically a monthly cost along with a per line remittance data processing cost. To process a huge amount of checks over time can be expensive with a lockbox.
Today, we see a drastic change with Accounts Payable Departments paying electronically. This shift to ePayments has elevated the FinTech trade with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Shortcomings of a Traditional Bank Lockbox
The lockbox often is relatively costly . Banks typicallyacquire a monthly rate as well as a per line fee connected withhandling payment remittance detail .
Lockboxes can contain website security concerns . The traditional bank lockbox still takes a fair measure of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative workers who are new to the financial institution or an outsourced contractor . The data from the lockbox gives you all crucial components to produce a fraudulent check .
Lockboxes don’t connect into your accounting system . Bank lockboxes process your payments and remittance data and thensend you the information . Your personnel still must input that information into your ERP to clear the cash .
Standard Bank Lockboxes Are Causing difficulty for your Customers' AP Department . Businesses are modernizing their AP Department to eradicate manual task and deciding to pay their customers electronically via ACH , Credit Card or vCard . These popular methods of ePayment are creating an increase in email remittance . FinTech solution businesses have bridged the gap to aidthose companies in a cost effective scalable option for automating Accounts Receivable .
Pros of a FinTech Lockbox
Reduction Cost
The primary objective of the FinTech Lockbox will be to reducefees per transaction and produce an Accounts Receivable automation application to permitbusinesses to rapidly clear cash and facilitate use of your working capital .
Trouble-free payment trail
You can easily track incoming ePayments in one place. Rather than flipping through remittance emails or going to the vendor portal to get payment data . The AR Lockbox gives you a single location to house ALL your incoming electronic payments produced for swifter cash application .
Removes mail float
Mail float is a term for the time needed for a check to go from the payer to the payee by way of the postal service . With the rise in B2B payments electronically , mail float is quickly becoming a thingof the past . The increase in electronic payments adopting FinTech Lockboxes with a major focus on the cost reduction and speed in which you clear cash and apply it to your working capital .